Weirton budget talks resume
WEIRTON – City officials met for another budget workshop Wednesday, continuing the effort to resolve a projected $1.6 million shortfall in the 2014-15 fiscal year, which begins July 1.
The meeting comes after numerous weeks of budget review committee meetings and talks. It was the second workshop to be held since Weirton City Council voted down the proposed Business and Occupation tax option at the May 12 regular meeting.
Ward 1 Councilman Ronnie Jones, Ward 2 Councilman Chuck Wright, Ward 4 Councilman George Ash Sr., Ward 6 Councilman David Dalrymple and Mayor George Kondik were absent from the meeting. Kondik and Jones were at an event related to the West Virginia Lottery Commission, according to City Manager Valerie Means.
At the last budget workshop, Ward 3 Councilman Fred Marsh, Ward 5 Councilman George Gaughenbaugh and Ward 7 Councilman Terry Weigel all presented different scenarios using a variety of combinations of the B and O tax, a cable franchise fee, a potential sales tax and adjustments to the municipal service fee and police and fire service fees.
At Wednesday’s meeting Weigel sponsored his own scenario, which entails:
Increasing all categories of the police and fire service fee by 50 percent. Residential would increase from $50 to $75. Commercial would increase from 15 cents per square foot to 23 cents per square foot, and churches and schools would increase from eight cents per square foot to 12 cents per square foot. This would generate an estimated $1,162,992 of revenue, Weigel said.
Enacting the B and O tax with the contractors category set at 100 percent of the maximum allowable rate, which is 2 percent. Contractors category revenue would be earmarked for economic development and capital improvement, and there would be a $100,000 per project exemption. Production and utility categories would remain set at 100 percent of the maximum rate, while the manufacturing category would be reduced to 25 percent of the maximum allowable rate, which is 0.075 percent.
Increasing the municipal service fee by 50 cents; from $2 per week to $2.50 per week. This would generate an estimated $210,000 of additional revenue.
Enacting a cable franchise fee with Comcast at its maximum allowable rate, 5 percent, which would generate an estimated $428,863 of additional revenue.
If passed, Weigel’s plan would result in an estimated total of $1,801,855 of new revenue, which would meet and exceed the amount needed to close the projected gap in the budget.
Gaughenbaugh noted the increase of the police and fire service fee in the plan would have a significant effect on ArcelorMittal.
“ArcelorMittal is going to get hammered,” he said. “I don’t want to tie myself to a police and fire service fee increase that will cost Arcelor $600,000 more.”
According to Dalrymple, who contacted The Weirton Daily Times after the workshop, the proposed increase would cost ArcelorMittal an additional $616,124 annually.
“That information was a big reason why I chose to opt for increases in the B and O: to lessen the burden on the residents and ArcelorMittal. They have shouldered the bulk of the fee and tax burden in the city for decades,” Dalrymple said.
The part of his plan that included B and O changes was voted down at the last city council meeting.
“There’s justification for the police and fire service fee increase because of inflation,” Marsh said. “At least that’s the way I see it.”
Weigel commented that officials may have more options, including a sales tax, if the city’s home rule plan application is accepted in the coming months.
Means noted that the implementation of a sales tax comes with some complicating factors.
“We definitely need to explore the sales tax, but I want to really caution on some of these predictions about how much money that will bring in and how soon,” she said. “There is a fairly long, extended time frame for that.”
“On any move with the sales tax I am recommending that we make no move on revenue reductions until we are solvent on what is coming in on a sales tax,” City Finance Director Tom Maher added.
In order to put a sales tax in place, current B and O taxes that have already been generating revenue would be required to be eliminated or reduced, making it a risky move in the eyes of some officials.
“I don’t believe there’s any push against a sales tax. I believe there’s actually a solid footing for the sales tax. But the only caution that we have is that, based on our discussions with the tax commissioner, this is not something that’s going to happen in three months or six months. It could take a year to a year and a half after we get home rule,” Maher said. “So anybody who is saying anything different is sadly mistaken. We have to walk through this cautiously.”
Means also described the estimated total revenue generated from a cable franchise fee as “a real guess,” cautioning councilmen against unrealistic expectations.
“That won’t happen for four to six months, and it would have to be pro-rated,” she said. “That’s a much longer process than just two readings, and that number itself is just a guess.”
“My thoughts are no matter what we do, there will be opposition to all of it. Nobody wants to pay more taxes, me included. Any combination we choose to do, we are going to hear about it,” Weigel commented.
Although Gaughenbaugh and Marsh did not express support for all of the actions included in Weigel’s scenario, Means and Maher will begin writing four pieces of legislation to encompass the steps involved. The proposals will be presented for a first reading and a vote at the next city council meeting at 7:30 p.m. June 9 at the Weirton Municipal Building.